I have been published in the UB Post and a frequent contributor to Seeking Alpha in the past. Frontier and emerging markets research and writing is my work, with a focus on Asian economies. I have chaired and moderated conferences related to emerging markets and economies in Asia. I keep in touch with a network of people investing in the places where capital markets are between the early and nascent stages of development. I studied political philosophy at the London School of Economics. I worked in trust banking prior to managing my own family office since 1999. I bring an interest to the history and stories of the people and places I write about, and want my readers know what it is like to be there without visiting. I write about wealth, stock exchanges, real estate, private equity, venture capital and cultural issues in the countries that I cover.

Tim Gocher's Commitment To Nepal Via Charity And Private Equity

In this interview, Tim Gocher discusses running the first Nepal-only international private equity fund, his 11-year-old Nepal dedicated charity and lends his uniquely candid and clear voice to the broader global issues of development and impact investing.

At the end of our 90-minute conversation, Mr. Gocher summarized his global vision:

Business and finance have not always taken society and the environment into account as stakeholders to manage from a risk perspective or to leverage from a competitive perspective… There is a cost to ignoring such stakeholders. This is as true in frontier markets like Nepal as anywhere.

History

JonSpringer: In 2003, you went to Nepal for the first time. This leads to a charitable fund (Dolma Development Fund) and a private equity impact fund (Dolma Impact Fund I). What role did your career prior to the trip to Nepal play in the vision you had for these projects and your ability to execute them?

Tim Gocher: In 2003, pretty much nothing. My background was in finance, investment banking and technology. None of those were particularly applicable to a desperately poor country in the grips of a civil war.

I remember feeling quite frustrated. I felt if I was a teacher, I’d be able to do some good. I suppose being a businessman was useful in figuring out how to both raise money for kids’ education and to develop ecotourism businesses that generated money for the education.

I managed to get individuals, friends at first, to sponsor children through the charity. These donors, who track the progress of their students, have grown more than I could have hoped. In that sense, there was some use in the end.

At that point in 2003, I didn’t think a commercial investment – or my day job, so to speak – would be useful. It was only in about 2011 that light switched on.

Springer: In 2003 when you started the charity, you didn’t make a connection that the charity was very similar in function to how a private equity fund would function there, albeit on a different scale?

Gocher: No. It was completely different. It was just based on philanthropy and poverty alleviation. Mainly education. We tried a few things. We tried putting in water pumps, putting in bridges over rivers, various things to help the communities. Those projects were very difficult to manage. People didn’t have the implementation skills. The money often didn’t effectively go to where it was intended.

If you want to generate a society that is more prosperous in the long-term, it has to be education. Education is the best form of long-term poverty alleviation. It was a bit of trial and error getting to that point. Then it was clear it was education first and then ecotourism to help pay for the education.

I didn’t really think of a private equity fund. At the time I was working for the energy company E.On financing wind farms and things like that. I completely had my day job and the Dolma charity in Nepal was a voluntary labor of love.

Until 2011, the charity did some things you could call impact investing. We invested in schools to help expand them and we invested in community ecotourism. These were things that we started before the term impact investing took hold.

Tim Gocher and Pooja Gurung in Tibetan dress at their wedding in 2007 (Photo: Yves Perreard)

By 2011, four things triggered me to start a private equity fund in Nepal:

1) The rise of the impact fund, particularly in South Asia. We saw Vineet Rai at Aavishkaar in India, probably the biggest impact fund in India, and there was huge growth in impact investing there. Globally, there’s Acumen, Omidyar and many others playing a role in the growing importance of impact investing. I saw that there were impact investors in Bangladesh, Sri Lanka and Pakistan but nothing in Nepal. We also saw the pioneering work the UK Department for International Development (DFID) was doing in stimulating sustainable wealth creation in frontier markets. We worked with them from an early stage and they were a catalyst not just for our development, but for the entire private sector of Nepal.

2) The political stability in Nepal improved. The civil war finished in 2006 when the peace accord was signed. Since then, politicians have come and gone, but there has been peace. That culminated in November 2013 with a successful election with 70% turnout. The Nepali Congress Party – the establishment party so to speak – won this election after the former Maoist rebels had won the prior election. Importantly, this means that the Maoists who were previously in battle with the government have now participated in two elections, won one and formed a coalition, and now lost one and gone into opposition peacefully. The fact that the Maoists can lose an election and still form a peaceful opposition is a very good sign for future political stability.

3) The economy of Nepal is the third factor. There is a chronic issue of under-employment locally. The economy is highly reliant on remittances from citizens working abroad. According to the National Unemployed Youth Society, of the 400,000 Nepalis entering the job market each year, 350,000 leave for work abroad. And the Asian Development Bank expects the number of annual job seekers to grow to 633,000 by 2020. This is a horrific state of affairs. There is not enough local job creation.

The flip side of this negative social strain of so many being away from home is that hard currency is coming back to the country. 63% of migrant workers’ families are the rural poor. These remittances have grown as the job crisis has not improved. Just over 25% of the GDP is now remittances and it has grown at multiples over the last 5 years. There is therefore a market-driven opportunity to improve product and service availability for the poor by helping local firms expand to meet the additional demand.

4) My marriage in 2007 to a Nepali lady, Pooja Gurung. This should be perhaps the first point in this list as it is the source of greatest inspiration. Pooja and her family are an example of what Nepal as a whole can achieve. She is from an educated family that worked their way up. In her twenties, she effectively built and managed a rural school and secured a much sought-after international teaching post in Singapore before we were together. She continues to be an international school teacher while advising on Nepali education. With two Anglo-Nepali boys, we have a vested interest in a prosperous future for Nepal and we hope their lives will be enriched by their diversity.

Taking into account these four drivers, we launched fundraising in 2011 for Dolma Impact Fund I which successfully concluded in 2013/2014. We are an impact fund answering a market demand. Our job is indeed to be commercially successful in order to generate sustainable employment. The two outcomes will be very closely correlated. So when we generate our impact reports, jobs is the metric that looms above all at the portfolio level.

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